THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION AS STIPULATED UNDER THE UK'S MARKET ABUSE REGULATION.
UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH INSIDE INFORMATION
IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
29 January 2024
DIGITAL 9
INFRASTRUCTURE PLC
("D9" or
the "Company" and, together with its subsidiaries, the
"Group")
Conclusion of the Strategic Review, Proposed Change to D9's
Investment Policy and other Company Updates
Outcome of the Strategic Review
Further to the announcement on 27
November 2023, the Board of Directors of D9 (the "Board") has
concluded its strategic review in respect of the Company (the
"Strategic Review").
Managed
Wind-Down
Following careful consideration of
the options available to the Company and after consultation with
its financial advisers, as well as taking into account feedback
received from a large number of shareholders and institutional
investors, the Board has determined that it would be in the best
interests of shareholders as a whole to put forward a proposal for
a managed wind-down of the Company (the "Managed
Wind-Down").
The Board intends to publish a
circular to shareholders (the "Circular") in the coming weeks in
order to convene a general meeting at which it will seek approval
from shareholders to amend the Company's investment objective and
policy. If approved, the Board will then endeavour to realise all
of the Company's assets in a manner that maximises value to
shareholders.
Next steps for the
wholly-owned assets (Aqua Comms, EMIC-1, Elio Networks and SeaEdge
UK1)
The Board intends to immediately
commence sale preparations for the Company's wholly-owned assets
ahead of launching competitive processes later this year. The Board
is mandating advisers to assist with the preparation of these sale
processes.
Next steps for
Arqiva
As part of the Strategic Review,
various options for realising the stake in Arqiva have been
considered on a preliminary basis by the Board. After careful
consideration of Arqiva's business plans and current market
conditions, the Board believes that the maximisation of the value
of D9's stake in Arqiva is likely to take longer to realise than
the other investments held by the Company. As such, while D9 will
continue to consider and be open to all options for Arqiva which
are value-accretive to shareholders, the Board has decided to defer
a sale process for D9's stake in Arqiva for the time being. The
Board will continue to explore various options including capital
markets alternatives.
Amendments to Investment Objective and
Policy
The implementation of the Managed
Wind-Down will require amendments to the Company's investment
objective and investment policy ("Investment Policy"). Such
amendments are subject to the approvals of the Financial Conduct
Authority (the"FCA"), shareholders pursuant to Listing Rule 15 and
the revolving credit facility (the "RCF") lenders. The RCF lenders
and FCA have been notified of the proposed new Investment Policy.
The Board intends to publish the Circular by the end of February
(or as soon as possible thereafter following receipt of approvals
from the RCF lenders and FCA) to convene a general meeting at which
it will seek approval from shareholders of the proposed new
Investment Policy by way of ordinary resolution.
The proposed new Investment Policy
will be one of effecting an orderly wind-down of the Company with a
view to maximising the value received from the Company's assets and
making any returns to shareholders, once the RCF has been repaid.
The Company will not make any new investments save that investments
may be made in existing portfolio companies when considered
appropriate to maximise value for shareholders.
Shareholders should note that during
the Managed Wind-Down, the Company intends to maintain its
investment trust status and listing. Maintaining the listing would
allow Shareholders to continue to trade Shares during the Managed
Wind-Down.
The Board could reconsider the
listing status of the Company following completion of the Managed
Wind-Down depending on the actions chosen for Arqiva and the Verne
Global earn-out at that time.
Shareholder returns
The Board expects to use the
proceeds from the Managed Wind-Down to repay the amount of the RCF
that will be outstanding following completion of the sale of the
Verne Global group of companies ("Verne Transaction")[1].
Once the RCF has been repaid, the
Board will review the potential allocation of any remaining
proceeds between the repayment of the indebtedness to the vendor in
respect of the Company's acquisition of its interest in Arqiva in
October 2022 and distribution to shareholders. No further dividend
distributions are planned in respect of the year ended 31 December
2023 and none are foreseen in the medium term. To the extent
possible, it is intended that any cash distributions to
shareholders will take the form of returns of capital.
Further, the Company's liquidity
constraints prevent it from being able to give consideration to the
implementation of a program to buy back shares in the market at
this stage.
Consequences of the amendments to the Investment Policy not
being approved
The Board considers the Managed
Wind-Down as likely to provide the best opportunity to maximise
value for shareholders going forward. However, in the event that
the amendments to the Company's Investment Policy which are
required to facilitate the Managed Wind-Down are not approved by
shareholders:
· the
Board and the Investment Manager will continue to comply with the
Company's current Investment Policy; and
· the
Board will work with its financial advisers to identify alternative
options for the future of the Company.
Charlotte Valeur, Interim Independent Chair of D9,
said:
"Throughout the strategic review process, the Board's primary
objective has always been to maximise shareholder value going
forward. Having carefully considered a number of options, we have
ultimately concluded that a Managed Wind-Down of the Company is
likely the best route to achieve this objective and seek to address
the discount to NAV that impacts our
shareholders.
The Board will assess the progress of the proposed asset sales
on an ongoing basis and will continue to monitor other potential
opportunities to realise income and capital value for shareholders
as they arise. We will also continue to engage in active dialogue
with our shareholders throughout this process."
A further announcement will be made
when the Circular is published.
Relationship with Triple Point Investment Management LLP
("TP")
The company is party to an
investment management agreement (the "IMA") with TP, which supports
the management of the Company's portfolio of investments and the
provision of certain other ancillary services to the Company. The
terms of the IMA include a provision that "The Company or the Investment Manager shall
be entitled to terminate this Agreement upon giving to the other
party not less than twelve (12) months' prior written notice of
termination, such notice not to expire before the fourth
anniversary of the date of Admission (the "Initial
Period")". The fourth anniversary of the date of admission
is 31 March 2025. The Company has advised TP that, subject to any
required consents, it presently intends to give notice to terminate
the IMA under the above provision, with any such notice of
termination to be issued on the later of 31st March 2024 or the
closing of the Verne transaction (the "Notice Date"). The Verne
transaction is scheduled to receive all the required approvals by
the end of Q1 2024. Pending the Notice Date, the Company is
actively exploring with TP whether the Company and TP might agree
revised commercial terms that would be in the best interests of the
Company and its shareholders given its future needs in the context
of the other matters set out in this announcement.
Verne Global update
Verne Global
Transaction
The Verne Global sale, announced on
27th November, 2023, is progressing towards completion
with all required approvals expected to be received by the end of
Q1 2024. The unconditional Finnish merger control clearance from
the Finnish Competition and Consumer Authority has been received.
All other completion workstreams, including those related to
financing, are being advanced and on track within the expected
timeline.
A further update will be provided in
due course.
Deferred Consideration
Payment
The new power agreement is being
progressed and on track with the expected timeline. The US$25
million (approximately £20 million) deferred consideration payment
will be payable on the earlier of (i) 15 business days after a new
power agreement is entered into (subject to closing) and (ii) the
later of 26 April 2024 and four weeks after closing.
Portfolio Update
The Board will release a trading
update in the coming weeks, ahead of the publication of full year
results for the year ended 31 December 2023.
As part of its reporting of the
results for the year ended 31 December 2023, the Board has mandated
an independent valuer to guide the Directors' assessment of the
fair value of its assets under International Financial Reporting
Standards, including the Verne Global potential earn-out payment of
up to $135m.
Shareholder Webinar
A webinar will be held on Monday 5
February 2024 at 12 noon GMT. Further details will be provided
closer to the date. Questions can be submitted by email to:
chair@d9board.com up to 5.00pm on the day prior to the
webinar.
ENDS.
FOR
FURTHER INFORMATION ON THE COMPANY, PLEASE
CONTACT:
Triple Point Investment Management LLP
(Investment Manager)
Diego Massidda
Ben Beaton
Arnaud Jaguin
Goldman Sachs International (Lead Financial
Adviser)
Alexandre Lucas
Owain Evans
Fabrice Francois
Alexander Tingle
|
+44 (0)20 7201
8989
+44 (0) 20 7774
1000
|
J.P. Morgan Cazenove (Financial Adviser and Joint Corporate
Broker)
William Simmonds
Jérémie Birnbaum
Jonty Edwards
|
+44 (0)20 7742
4000
|
Peel Hunt (Joint Corporate Broker)
Luke Simpson
Huw Jeremy
|
+44 (0) 20 7418
8900
|
The person responsible for making
this notification is Helen Richardson, Company
Secretary.
About Digital 9 Infrastructure plc:
Digital 9 Infrastructure plc (DGI9)
is an investment trust listed on the London Stock Exchange and a
constituent of the FTSE All-Share, with the ticker DGI9. The
Company invests in the infrastructure of the internet that
underpins the world's digital economy: digital
infrastructure.
The Investment Manager is Triple
Point Investment Management LLP ("Triple Point") which is authorised and
regulated by the Financial Conduct Authority, with extensive
experience in infrastructure, real estate, and private credit,
while keeping ESG principles central to its business mission.
Triple Point's Digital Infrastructure team has over $300 billion in
digital infrastructure transaction experience and in-depth
relationships across global tech and global telecoms
companies.
The number 9 in Digital 9
Infrastructure comes from the UN Sustainable Development Goal 9,
which focuses the fund on investments that increase connectivity
globally and improve the sustainability of digital infrastructure.
The assets DGI9 invests in typically comprise scalable platforms
and technologies including (but not limited to) subsea fibre, data
centres, terrestrial fibre and wireless networks.
Since IPO in March 2021, DGI9 has
invested in the following data centres, subsea fibre and wireless
network assets (other than Verne Global):
n Aqua
Comms, a leading owner and operator
of 20,000km of the most modern subsea fibre systems - the backbone
of the internet - with a customer base comprising global tech and
global telecommunications carriers;
n Arqiva, the only UK national
terrestrial television and radio broadcasting network in the United
Kingdom - providing data, network and communications services, as
well as a national IoT connectivity platform;
n Elio
Networks (previously Host
Ireland) a leading enterprise broadband provider that owns and
operates Fixed Wireless Access networks;
n EMIC-1, a partnership with Meta
on a 10,000km fibre system from Europe to India;
n SeaEdge
UK1, a data centre and landing
station for the North Sea Connect subsea cable, part of the North
Atlantic Loop subsea network, improving connectivity between the
UK, Ireland, Scandinavia and North America.
The Company's Ordinary Shares were
admitted to trading on the Specialist Fund Segment of the Main
Market of the London Stock Exchange on 31 March 2021. The Company's
ordinary shares were admitted to the premium listing segment of the
Official List of the Financial Conduct Authority and to trading on
the premium segment of the Main Market on 30 August
2022.
For more information on the
Investment Manager please visit www.triplepoint.co.uk.
For more information, please visit www.d9infrastructure.com.
Important Notices
Goldman Sachs International, which
is authorised by the PRA and regulated by the FCA and the PRA in
the United Kingdom, is acting exclusively for D9 and no one else in
connection with the matters referred to in this announcement and
will not be responsible to anyone other than D9 for providing the
protections afforded to clients of Goldman Sachs International, or
for providing advice in relation to the matters referred to in this
announcement.
J.P. Morgan Securities plc, which
conducts its UK investment banking business as J.P. Morgan Cazenove
("J.P. Morgan Cazenove") and which is authorised in the United
Kingdom by the PRA and regulated in the United Kingdom by the PRA
and the FCA, is acting as financial adviser exclusively to Digital
9 Infrastructure plc and no one else in connection with the
Strategic Review and will not regard any other person as its client
in relation to the Strategic Review and will not be responsible to
anyone other than Digital 9 Infrastructure plc for providing the
protections afforded to clients of J.P. Morgan Cazenove or its
affiliates, nor for providing advice in relation to the Strategic
Review or any other matter or arrangement referred to herein,
including, but not limited to, the Verne Transaction.